Corruption
CBI Questions Sequoia Capital Over Suspicious Payments to Politician’s Firm for Favourable Decisions
India’s Central Bureau of Investigation (CBI) has accused liquor giant Diageo and venture capital firm Sequoia Capital of making suspicious payments to a firm linked to Indian politician Karti Chidambaram to secure favorable government decisions, according to a document reviewed by Reuters.
Allegations Against Diageo
The CBI alleges that Diageo Scotland transferred Rs 12,45,000 to Karti Chidambaram’s firm after a 2005 government-imposed ban on duty-free sales of its Johnnie Walker whisky severely impacted its business. The payment, originally described as consultancy fees, was reportedly intended to influence public servants to lift the ban.
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“In order to lift the ban, Diageo Scotland approached Karti P. Chidambaram,” the document states. The ban, imposed by the India Tourism Development Corporation (ITDC), a government-majority firm with a monopoly on duty-free liquor sales, caused significant losses for Diageo.
The agency launched an investigation into Diageo’s activities in 2018, focusing on investment approvals. The timeline for the alleged payment remains unclear. A spokesperson for Diageo’s Indian unit, United Spirits, and its British unit declined to comment on the allegations.
Sequoia Capital Under Scrutiny
The CBI also accused the Mauritius unit of Sequoia Capital of making suspicious payments to Karti Chidambaram’s firm in 2008 to influence approvals for an Indian investment. The proposal was reportedly approved in November 2008 by Karti’s father, P. Chidambaram, who was serving as India’s finance minister at the time.
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While the case document does not name the former finance minister as an accused, it notes his role in the approval process. In response to Reuters, P. Chidambaram declined to comment on the matter, and Sequoia did not respond to requests for comment.
Legal Ramifications
The CBI has opened a formal case against Diageo and Sequoia Capital, alleging potential violations of India’s anti-corruption laws, which prescribe penalties of up to seven years in prison and fines for bribery of public servants. The investigation will probe further into whether the payments breached India’s criminal and anti-graft laws.
Ongoing Challenges for Diageo
This case adds to Diageo’s legal troubles in India. The company is already under investigation by anti-corruption authorities for alleged irregularities in billing and discount practices in New Delhi. Diageo has stated that it is cooperating with the ongoing investigation.
Efforts to contact Karti Chidambaram, a Member of Parliament and son of former finance minister P. Chidambaram, went unanswered. Both politicians are members of India’s main opposition Congress party.
